IPFS is about to take off, how to ambush the "storage" sector?

Before DeFi can even get comfortable, Filecoin's mainnet will be launched between July 20 and August 20. Although this is the Nth time that Filecoin has been delayed, it does not prevent people from pursuing it, because the cost of missing an opportunity is much higher than the cost of a mistake.

There is another reason why everyone has high expectations for Filecoin. In the DeFi boom, most people have missed the best investment opportunity, so they expect Filecoin to drive the next market hotspot, and then ambush related sectors in advance, obtain early profits, and make up for investment mistakes in DeFi.

Many people don’t know much about Filecoin and IPFS. This article will briefly introduce Filecoin and IPFS, focusing on the potential opportunities brought by Filecoin’s “sector effect” and the unconventional investment logic derived from Filecoin.

A new behemoth comparable to BTC and ETH

First of all, IPFS is not a blockchain project. There is no blockchain-specific technology in the technology stack. It was launched as early as 2015, and the IPFS project has been implemented and running for a long time. In simple terms, IPFS is a peer-to-peer network, which is easy to understand if you know BT seeds. The well-known Google Chrome, Firefox, Ethereum, etc. have all joined the IPFS network.

Since IPFS has been relatively successful, why does Protocol Labs (founded by Juan Benet, the inventor of IPFS) want to build an incentive layer Filecoin (FIL) on the IPFS protocol? Because the fundamental reason why IPFS did not succeed is the lack of an incentive system. Everyone wants others to provide data for them and to seed them. Without an incentive mechanism, how can others selflessly contribute to others? The incentive layer Filecoin came into being. The market value of the entire project has been estimated at $30 billion, becoming a new behemoth in the crypto world.

Can Filecoin trigger the next hot spot?

There is no doubt that it can. First of all, Filecoin and IPFS have the potential to subvert the existing HTTP. To put it bluntly, subverting HTTP means subverting the current Internet. Whether it is bragging or not, whether it can be realized is not important at the moment. What is important is that this story is too awesome. You can see how much the currency circle lacks new stories now.

Secondly, the POC craze last year has already verified the popularity of the Filecoin market in advance. Last year, a wave of POC mining was popular in China. Although the period was not long, it should be noted that this was just the aftermath of Filecoin. Filecoin has always been very popular. Many mining machine manufacturers have started to do business with hard disk storage mining machines, while the Filecoin team is very Buddhist and has been delaying the delivery. A large number of idle hard disk mining machines have appeared in the market. Where can they be mined? POC projects have begun to appear in large numbers, filling the market gap.

Filecoin itself doesn't have many opportunities

There are three main ways for us to participate in Filecoin: ICO, secondary market, and mining.

ICO: High barriers to entry

The crowdfunding threshold for Filecoin is that only US citizens with an annual income of US$200,000 or a spouse with an annual income of US$300,000 and a net worth of more than US$1 million are eligible to participate in the crowdfunding. Even if you travel back in time, most people are still not eligible to participate.

Secondary Market: High Risk

The Filecoin (FIL) mainnet has not been launched. Currently, all FIL on the secondary market are futures. Most of the FIL futures listed are from fake exchanges, and it is even a question whether they can be redeemed in the end. It is very risky to use real money to exchange for a blank check.

When FIL is officially listed on major exchanges, you may be able to obtain good returns by taking over in the secondary market, but the popularity and valuation of FIL are already very high, and its early value has been almost mined, so the profit margin will not be too large.

Mining: High threshold, many scammers

Filecoin uses a network benchmark reward model instead of a time exponential decay model, and it is difficult for individual miners to meet the requirements in hardware operation and maintenance, security, and stability. After Filecoin announced the need for GPU mining at the end of 2019, the requirements for mining machine hardware configuration have become increasingly higher. The most worrying thing is that the Filecoin team itself has not figured out the problem of mining machine hardware configuration. Although the possibility and magnitude of modification are not too large now, the possibility of making trouble cannot be ruled out.

The most terrifying thing is the fraudulent mining machine vendors, who use the IPFS banner to do the ZJP project and use their mining machines to mine their coins, while the selling price of the mining machines is 5-10 times the cost price. Wherever there is a lot of excitement, there are scammers, and the large number of scammers also reflects the high popularity of IPFS.

“Sector Opportunities” in the Storage Market

The linkage of sectors has been discussed in previous articles. When a certain coin is hot in the market, it will attract market funds to flow in. By the time retail investors find out, the price of the coin has already risen too high. What should retail investors do if they don't catch the first wave of leading coins? They will find a few coins with similar fundamentals in the sector. One has risen to 100 yuan after a round of speculation, and there is a similar coin that is only 20 yuan. Which one would you prefer to buy at this time? This is the price comparison effect.

The leader of this storage craze is Filecoin, which is expected to be launched in August. There is no doubt that it will usher in a new wave of sector speculation and drive other similar currencies to follow suit. The sector follower coins must consider the fundamentals of the project. In fact, there are not many storage projects with slightly better fundamentals in the market.

The two oldest storage projects are Storj and Sia, and another storage project is Arweave. Arweave is most closely related to Filecoin. Filecoin is an incentive layer developed by the IPFS team itself, and Arweave is an incentive layer developed by another team on IPFS.

Another more eye-catching one is Justin Sun’s BTFS mainnet, which also does storage mining. BTT is the native token of the BTFS mainnet, which is actually a steal from Filecoin.

Finally, there are domestic storage projects, which are the POC projects that were popular for some time. Many of these projects have joined the ZJP model. With the launch of Filecoin, they will most likely take the opportunity to take advantage of the popularity, but the risks are very high.

In addition to the investment in the cryptocurrency circle itself, there is another idea, that is, the upstream beneficiaries of the previous POW mining are AMD, Nvidia and other companies related to mining hardware. If the storage mining brought by Filecoin really becomes a big trend in the future, will hard disk manufacturers also become the biggest beneficiaries? Buying stocks of related manufacturers may be more stable.

Conclusion

Finally, let me pour some cold water on you. After Filecoin goes online, there won’t be much real storage demand, and it won’t be able to compete with centralized storage in the early days. Only when IPFS continues to scale up and its security and stability reach a certain level, will there be real commercial-grade storage demand.

Therefore, it was difficult for Filecoin to meet investors’ extremely high expectations in the early days, and it was more of a speculative craze from the market.